Bullish Sydney Market 08-09

According to Westpac's chief economist guru, Bill Evans, he expects the Sydney housing market to pick up very soon, with house prices rising 15% over the next 2 years.

In his speech to REINSW members at the Target On Property seminar Evans said that he believed that the strength of the current Australian economy would help to inoculate the local property market, and coupled with a lack of supply and rising rents, prices will pick up more strongly over the next couple of years.

This is a general comment only and does not constitute advice. Before making financial decisions you should seek advice from a professional adviser, who can take into account your specific circumstances and investment goals.

As an Economist myself, I can say that the Banks economists (Evans, Caton, etc) are idiots.

The consensus of Treasury and private research firms is that there will be at least two interest rates rises in early 2008. That is hardly supportive of a 15% increase in house prices.

Tony

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Hi Tony

That's a pretty big call. Perhaps their guesses are just a bit more informed than ours. Does that mean they're more accurate - sometimes but sometimes too much info is a problem too.

About 2 years ago Bill Evans I was there when he told a room full of private equity players the AUD would get to US$0.90 within 2 years. So he got something right at least!

Cheers
N.

Nigel

This is a general comment only and does not constitute advice. Before making legal or financial decisions you should seek advice from a professional adviser, who can take into account your specific circumstances and investment goals.

By the way, when did you last get a 7% pay rise?
Do you expect to see yoursalary increase by 7% annually?
If not, then how on earth can you merrily accept that real estate would return annual increase of that magnitude?

By the way, when did you last get a 7% pay rise?
Do you expect to see yoursalary increase by 7% annually?

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I got a 100% payrise (doubled my income) back in 1998 when I changed jobs, and then a 50% payrise in 2000 when I changed jobs again.

Since then I got only about 20% increase over the following 7 years, but I'm expecting to get another 10 - 20% increase if I get a new job sometime this year.

If you stay with the same employer and do not increase your skills - then you are not likely to get much in the way of pay rises. You need to work hard to get increases in pay - and perhaps take risks by moving employers or industries.

If not, then how on earth can you merrily accept that real estate would return annual increase of that magnitude?

The last 10yrs have been a complete anomoly.

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There are historical figures available for some property in Australia going back to at least the early 1900s ... these figures clearly show an average property growth of at least 7% ... pretty hard to ignore historical data that proves such sustained growth (over a long period) is possible.

In the past couple of decades with the development of easy finance, longer term loans, higher LVRs, and even multi-generation loans - all makes property easier to afford and allows people to spend more than they would have at any time in the past. This isn't infinitely sustainable - and we are now seeing some of the fallout in the US of overly easy finance arrangements ... but this too shall pass and the long term trends will remain intact.

If you see 15% increase over the next decade I'd be surprised. By the way, when did you last get a 7% pay rise?
Do you expect to see yoursalary increase by 7% annually?
If not, then how on earth can you merrily accept that real estate would return annual increase of that magnitude?

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Since when has a salary been linked to the price of real estate? Its about supply and demand. Housing starts are much lower than demand. Immigration is increasing - looks like a lot of pent up demand coming the way I see it.

The boom we had after 1987 (not the last boom but the one before that, that began after the stock market crash of 1987) was actually DURING the highest interest rates we've seen in this country. I distinctly remember my house price doubled in the space of less than 12 months as my interest rate moved from 14.5% > 18%.

And Yes, I know that inflation was running at 9.4% in 86-87 ......and we are nowhere near that currently but we are hitting 3%+ which has the RBA concerned.